Fintech Is Slowly Taking Over The Financial Industry
FinTech companies are starting up across the globe, but what exactly is FinTech?
What is FinTech?
Financial Technology (or FinTech as it’s starting to become more commonly known as) is a new industry slowly taking over.
FinTech is an industry which offers financial services to people while utilizing the latest software and technology, from computer programs to apps FinTech offers something for everyone.
FinTech covers the more traditional financial service but is also taking advantage of services such as crowdfunding and peer to peer lending.
It’s too early to say whether the FinTech industry is a passing phase or if it’s here to stay, but for the time being new start-ups are launching all the time.
FinTech in the UK
The UK Government have already pledged their commitment to making the UK the FinTech Capital of the World. The UK FinTech industry has already managed to generate £6.6 billion and created 60,000 jobs in 2015.
Recently the UK and Singapore came together to launch the FinTech Bridge. The Monetary Authority of Singapore (MAS) along with the Financial Conduct Authority (FCA) have joined to form a regulatory cooperation agreement.
This new agreement allows UK and Singapore regulators to refer FinTech firms to similar companies based in the other country. There are also guidelines which state how regulators will share and use information.
FinTech vs. the banking industry
The banking industry has recently been featured in the media a lot; with a string of crisis’s affecting consumer confidence banks are finding rebuilding their reputation a tricky task. The FinTech industry, however, is soaring, and this had made the banks stand up and take note.
A recent report has stated that 63% of customers would use and recommend a FinTech company over a traditional financial service.
The banking industry has two options; they can self-design their financial technology platforms, or they can use the existing FinTech company that has pre-designed platforms. Both of these options come with costs and risk.
The benefits of FinTech
The benefits of the FinTech industry are –
• FinTech can offer potential solutions to businesses
• FinTech solutions are effective and efficient
• Financial solutions on offer include improved cash flow generation, capital management, monitoring, online transactions, etc
• Technology exists which can match lenders with borrowers
• The digital aspect of the technology allows for simpler auditing processes
The future of FinTech
It is too early to speculate how the FinTech industry will progress, with new businesses opening every day it would appear that the sector still has a lot of life in it yet.
One thing is sure; FinTech has opened up a whole new side to financial services which forced other industries to change and adapt or else they run the risk of vanishing.
The FinTech industry successfully shook up and brought the Financial Industry back in action.
The long-term impact and the overall success of the FinTech industry will be clearer after a few financial cycles, but one thing is for certain. There will be a lot of people paying close attention to the bigger picture.